Switzerland: Automatic Exchange Of Information (AEOI): Publication Of Final AEOI-Guideline

Yesterday, the Swiss Federal Tax Administration (SFTA) published
the final version of the AEOI-Guideline in German as well as in
French and Italian. Since our
last Briefing published in November 2016, Switzerland signed joint
declarations on the introduction of the AEOI with 16 new partner
states.

Final version of the AEOI-Guideline

The final version of the AEOI-Guideline in German, French and
Italian is available at: https://www.estv.
admin.ch/estv/de/home/internationales-steuerrecht/fachinformationen/aia/publikationen/wegleitung.html

Compared with the second draft of the AEOI-Guideline in German
which was published in November 2016, only a few minor amendments
were made. The SFTA may amend the AEOI-Guideline further at any
time, if required. Therefore, Swiss Financial Institutions should
follow the developments very closely and check on a regular basis
if amendments were made.

Since the entry into force of the AEOI-Act on 1 January 2017,
Swiss entities may claim a declaratory decision from the SFTA
regarding their qualification as Financial Institution for
AEOI-purposes. It is recommendable to every Swiss entity which has
not yet certainty with regard to its AEOI-status to claim such a
decision as soon as possible.

Update regarding Switzerland's Partner States

Since the end of November 2016, Switzerland has signed joint
declarations on the introduction of the AEOI with 16 new partner
states (highlighted in bold in the table on page 3). As of today,
Switzerland has 58 partner states (including all 28 EU member
states). With 37 of them, Switzerland will start exchanging data in
2018, whereas with the remaining 21 states the data exchange will
start in 2019. For further infor- mation, please refer to the table
outlined on page 3.

As far as Switzerland's neighboring country Liechten- stein
is concerned, there is currently no AEOI- agreement in place,
although Liechtenstein will exchange data with the EU member states
already in 2017. According to the latest news, Liechtenstein wants
to enter into a tailor-made agreement with Switzerland instead of
the normal AEOI-agreement, whereas Switzerland prefers to sign the
normal AEOI-agreement with Liechtenstein. It remains to be seen
what kind of AEOI-agreement, if any, both countries will enter
into.

Voluntary Disclosure in Switzerland

As outlined in our Briefing in November 2016, persons with tax
residency in Switzerland and undeclared movable property in one of
Switzerland's Partner States (or future Partner States) have
the possibility to file a voluntary disclosure with the competent
Swiss cantonal tax authority. As a general rule, the exemption from
the penal punishment available for first-time disclosing taxpayers
will only be granted in cases where the tax authority has no
knowledge of the undeclared assets. As the AEOI will start in 2017
in Switzerland and the SFTA will for the first time receive data in
autumn 2018, the crucial legal ques- tions is, in which cases the
cantonal tax authorities consider the undeclared assets as
'known'.

The practices of the tax administrations with regard to this
question differ widely from canton to canton. According to recent
verbal announcements by the Zurich tax authorities, the Zurich
Cantonal Tax Administration will treat the tax evasion as known
only when the data from foreign tax authorities is received via the
SFTA by the Zurich Cantonal Tax Administration itself which will
not be the case before summer 2018. Thus, provided the other
conditions are met, the possibility to benefit from a nonpunishable
voluntary disclosure will – at least for taxpayers in the
Canton of Zurich – remain open until summer 2018.

It is possible that other cantons consider the unde- clared
assets as 'known' already as of 1 January 2017 due to the
coming into effect of the legal basis of the AEOI in Switzerland or
at the time when the SFTA receives the data (in summer 2018). In
this case, a voluntary disclosure might no longer be nonpunish-
able with the consequence that a fine has to be paid in addition to
the tax due for the past 10 years (including interest). However, if
a taxpayer shows willingness to collaborate with the authorities,
it may be expected that the fine could be at the lower end of the
scale (ranging from 1/3 to three times of the amount of the evaded
tax).

This shows that it depends significantly on the practice of the
cantonal tax authority in charge, whether a voluntary disclosure
will still count as a nonpunishable or not. Therefore it needs to
be assessed on a case- by-case basis which actions to take in view
of a regularization of undeclared assets. In order not to
jeopardize the exemption from penal punishment, we recommend to
submit the voluntary disclosure with the competent tax authority as
soon as possible.

Our Support

We would be delighted to assist you should you have any
questions with regard to the implementation of AEOI in Switzerland
in general, the final AEOI- Guideline or also in the case when you
are consider- ing a voluntary disclosure. Furthermore, we would be
pleased to provide support to Financial Institutions concering
their compliance with duties arising from the Swiss AEOI
legislation or representing them in proceedings with the SFTA.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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